Why Par Pharmaceutical Shares Skyrocketed


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of generic and branded drug distributor Par Pharmaceutical (NYS: PRX) screamed higher by as much as 43% earlier in the trading session after the company agreed to be purchased by private equity firm TPG Capital.

So what: The terms of the deal are that TPG Capital will pay $50 per share in cash, or $1.9 billion, for Par Pharmaceutical. Par is, however, allowed to shop itself around for a better offer prior to Aug. 24. If no better deal is found, the deal is expected to close sometime in the fourth quarter.

Now what: It pays to note that shares have traded above that $50 offer price, signifying that some investors expect Par will be able to find a higher bid. The company's generic and branded drug portfolio generally offers high barriers to entry. Also, as with most drugmakers, including generics, operating margins are robust, which could attract potential buyers. However, we've probably seen the vast majority of premium tacked onto Par's share price here, so further speculation isn't warranted in my opinion.

Craving more input? Start by adding Par Pharmaceutical to your free and personalized watchlist so you can keep up on the latest news with the company.

The article Why Par Pharmaceutical Shares Skyrocketed originally appeared on Fool.com.

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